Calvert Foundation™

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Program-Related Investing

What is a Program-Related Investment?

A program-related investment – commonly called a PRI – is a tool used by foundations to leverage their philanthropic dollars. Unlike grants, PRIs provide foundations a return on their investment, through either repayment or return on equity. PRIs give charitable organizations or commercial ventures access to needed capital, typically at favorable terms. Note: PRIs are available solely for foundation purposes and are not available to individual investors.

Funder benefits include:

  • PRI payments to recycle for subsequent charitable investments
  • Ability to count PRIs toward its minimum 5 percent payout of net assets
  • The chance – no matter type or size of the foundation – to have a greater programmatic impact

How do PRIs work?

PRIs fund capital projects, provide bridge loans, or offer liquidity to loan funds, among other things. PRIs employ financing methods such as loans (senior and subordinated), loan guarantees, lines of credit, linked deposits, or equity investments. Often, PRIs are made to share risk and leverage co-investment, and often attract traditional financial players to the table. Some program areas funded by PRIs include:

  • Affordable Housing
  • Arts
  • Community Development
  • Cultural Organizations
  • Historic Preservation
  • Economic Development/Entrepreneurship/Micro-Businesses
  • Charter Schools
  • Health Clinics
  • Child Care Centers
  • Faith-based Structures and Programs,
  • Social Services, and
  • Open Space and Wildlife Habitat Protection

Because PRIs are paid back, the funds are recycled into the next charitable purpose. PRIs are increasingly used to help funders have greater and more sustainable impact within their philanthropic agendas.

How do I get started?

To get started with PRIs, you will first want to take a close look at your foundation’s mission, goals and size. The questions below will help you get started on identifying what is most important to you in a PRI program.

  1. Examine your foundation’s mission for potential fit with PRIs. What values are most critical to your foundation? How and when can PRIs leverage even greater impact?
  2. Determine your credit standards. There is a broad range of credit quality in the nonprofit sector. How much risk and impact is right for your foundation?
  3. Identify your best opportunities. How do you identify attractive “deal flow?” How can you best extend your foundation’s grant-making abilities through PRIs?
  4. Consider the necessary policies and procedures for setting up PRIs at your foundation. What steps will you need to take to establish parameters, set approval processes, and manage expectations for this new type of investment?
  5. Understand how this may affect your operations. How will you build staff capacity and integrate third-party expertise into the PRI process?

Calvert Foundation Makes PRIs Easy

Calvert Foundation makes PRIs easy for small foundations. We offer two main opportunities for PRI makers. The first is one we call “PRI in a Box,” which is one of the most convenient ways to get started. This allows foundations to simply invest in Calvert Foundation’s Community Investment Note™, a high-impact investment product consistent with PRI guidelines that generates economic opportunities in underserved communities and markets. These professionally managed investments finance a portfolio of over 250 nonprofit organizations focused on affordable housing, microfinance, small business lending, community facilities, fair trade, social enterprise, and more.

The second option, “PRI Outside the Box,” is appropriate for foundations that wish to design and operate their own customized PRI programs. This option employs Calvert Foundation’s Community Investment Partners (CIP) program, which provides information, analysis, and advice, and delivers professional management and servicing of community financial assets. CIP can help you:

  • Determine your goals and readiness for a customized PRI initiative
  • Design policies and procedures for your fund
  • Launch your program and help with ongoing administration

Contact us to learn more! Call 800.248.0337 and ask for Justin Conway.